The following post is taken from a letter to the editor of the Torrance Tribune. I post it today as a sample of some of the tactics going on in the real estate industry. It is not meant as advice, simply as an example of what not to do.

By Gerry Chong

An interesting story is currently circulating around the Internet that is purportedly true, but I could not vouch for its authenticity. I repeat this only to describe a mindset that ensues when an entitlement mentality erodes society’s morality:

As a Realtor for the past 28 years, I thought I had seen or heard it all… until now. I was showing homes in Pontiac, Michigan one afternoon recently and showed up at a home at the 4 p.m. time my appointment was scheduled for. After I woke up the homeowner, she let us in and then proceeded to tell my buyers and I (sic) that she had already entered into a contract to sell the home on a short sale (a short sale is a sale where the bank accepts less money than is owed on the home). After some chit-chat, she proceeded to tell us that she and her sister (who also lived in the area) were buying each other’s homes via the short sale process. I mentioned to her that I thought relatives could not be involved in those transactions. She smiled and said, “We have two different last names, so no one knows the difference.” She went on to tell us that each of them owed over 100K on their homes and were in the process of buying each other’s homes for 10-15K cash. To top it off, they were each receiving $3,000 in government-provided relocation assistance at the closing.

My buyers and I were amazed that she was outright admitting to fraud and yet, she continued. She began to tell us that the best part of her scheme was that because they are currently not working, that they (both) are now receiving Section 8 vouchers. I said I thought those were for renters and she said, “That’s the best part–me and my sister are going to be renting each other’s homes so we don’t even have to move, and Obama is going to give us each $800 a month to pay the rent!” She then picked up a picture of Obama and did a little happy dance around her living room and while she kissed the picture she was singing, “Thank you, Obama…thank you, Obama.”

So here’s the bottom line…Both of these scammers got at least $80,000 in debt for- given–$3,000 in cash for relocation (when in fact, they did not relocate); and to boot, you and I will be paying $1,600 in rent for them each and every month, perhaps forever… End of story. Prominent Stanford University Economist and Hoover Fellow Dr. Thomas Sowell wisely noted, “One of the consequences of such notions as ‘entitlements’ is that people who have contributed nothing to society feel society owes them something, apparently for being nice enough to grace us with their presence.” Dr. Sowell continued, “I have never under- stood why it is ‘greed’ to want to keep the money you’ve earned, but not greed to want to take somebody else’s money.”

Fannie Mae and Freddie Mac reached a milestone in refinancing more than 2 million loans through the Home Affordable Refinance Program, according to the Federal Housing Finance Agency.

The November 2012 Refinance Report noted that nearly 130,000 homeowners refinanced their mortgage through HARP, making it the second biggest month in 2012, noted the FHFA.

Between January and November of 2012, nearly 1 million loans were refinanced through HARP, which is more refis than any year since HARP was established in 2009.

The consistent high volume of HARP refis is due to record low mortgage rates as well as program implementations in 2012, FHFA stated.

HARP volume represented 23% of total refi volume in November. Additionally, 46% of the loans refinanced through HARP had loan-to-value ratios greater than 125%.

In November, HARP refis accounted for 68% of total refinances in Nevada, almost tripling the 23% of total refinances nationwide. Similarly, in Florida, HARP refinances represented 56% of total refis, more than doubling the HARP volume nationally.

FHFA noted that a data reporting change to provide consistency between both government-sponsored enterprises results were incorporated, adding 160,000 loans to the total HARP volume.

Both GSEs provide more than $5.7 trillion in funding for mortgage markets and financial institutions.

In his State of the Union address on Tuesday night, President Barack Obama added his name to the list of people concerned that mortgage-lending standards might be at least a bit responsible for holding back the housing market.

During the market’s boom years, lenders extended credit widely, and common-sense practices such as verifying a borrower’s income often went out the window.

But now many in the mortgage industry and in government have been worried that the pendulum has swung too far back amid a slew of rules designed to prevent reckless loans. Critics claim that qualified borrowers are currently being shut out of the market.

“Right now, overlapping regulations keep responsible young families from buying their first home,” Obama said in his State of the Union Address on Tuesday night. “Let’s streamline the process, and help our economy grow.”

Critics are likely to see no small irony there, given that many of the rules were mandated by Obama’s signature Dodd-Frank financial overhaul of 2010.

But there are more rules at issue than just the Dodd-Frank set, from appraisal restrictions to mortgage “put-backs” from investors to new rules for loan servicers, all of which are being hashed out by different regulators.

The remarks suggest that the White House, over the coming year, will make a bigger issue out of reducing barriers to credit for new buyers, as it has already tried to do for those seeking to refinance.

New foreclosure starts in California fell more than 60% in January aided by the California Homeowner Bill of Rights aimed at prohibiting certain aggressive bank practices went into effect.

The real estate website reported a 60.5% decline in California default notices in January from December. The number of default notices — the first formal step in the state’s foreclosure process — fell 77.7% from December 2011. A total of 4,500 such filings were logged last month, the lowest number of default notices since at least September 2006, when the website’s records begin.

The website gave no reason for the sharp decrease in notices of default, but noted that the drop came in January, when a package of tough new laws that provide homeowners with some of the nation’s strongest protections from bank repossession practices went into effect.

Most notably, the Homeowner Bill of Rights bans the practice of “dual tracking,” in which a lender seizes a home while the owner is negotiating to lower mortgage payments.

Passed last year, the legislative package was sponsored by California Atty. Gen. Kamala D. Harris and written by 10 Democratic lawmakers.

The laws also outlawed so-called robo-signing — the improper or faulty processing of foreclosure documents — and would allow state agencies and private citizens to sue financial institutions, under limited conditions, for economic compensation and for additional civil damages of up to $50,000 if lenders willfully, intentionally or recklessly violate the law.

Three people face charges for their role in an alleged fraud scheme by using the Internet to target struggling homeowners in Northern California.

Ronald Cupp, 58, of Santa Rosa, Randall Heyden, 69, of San Rafael and Angelle Wertz, 38, also of Santa Rosa were arrested on 57 charges including theft, forgery, notary fraud and recording of false documents, Attorney General Kamala Harris announced on Monday.

The three are accused of luring the homeowners through six websites, including “” and collected thousands of dollars in upfront fees ranging from $1,000 to $10,000.

The scam ran through Cupp’s mortgage company—North Bay Trust Services—the three created fraudulent documents that only delayed a homeowner’s foreclosure, but did not satisfy the preexisting mortgage debt to the original lender.

“Vulnerable California homeowners thought they were working to save their homes but were actually the victims of a fraudulent scheme,” Harris said in a statement. “Today, it’s not enough to dismantle the brick-and-mortar aspect of a criminal operation; we need to shut down criminal operations in cyberspace as well.”

Prosecutors in Marin and Sonoma counties received a tip about the scam, said Nick Pacillo, a spokesman at the AG’s office. It is not known how many people have been victimized as state prosecutors are hoping more will come forward.

Cupp, Heyden and Wertz did not enter pleas during their appearance in Sonoma County Superior Court on Monday. Cupp and Heyden are being held in the Sonoma County jail on $500,000 and $75,000 bail, respectively.

The number of homes statewide sold for more than $5 million reached an all-time high last year, while those selling at a million dollars or more rose to the highest level since 2007 last year, a real estate information service has reported.

Cash buyers, an upturn in home prices and the recovering economy played a role in the increase, as did a year-end rush among the wealthy to take advantage of lower capital gains taxes by closing before year end.

Across California, 697 homes sold for more than $5 million compared to the previous high of 491 in 2011.

The 26,993 homes sold at $1-million-plus represented a 26.9% jump from 2011, according to San Diego-based DataQuick. In comparison, 42,502 home sales exceeded the million-dollar mark in 2007, before the mortgage meltdown dragged down home prices across the housing market.

The record was set in 2005, when 54,773 homes sold for a million dollars or more. The luxury market outpaced overall sales, which were up 8.2% statewide.

“It should go without saying that buyers and sellers in the prestige market tend to respond to different motivations and incentives than the rest of the market,” John Walsh, DataQuick president, said in a press release. “Job security, down payment sizes and mortgage interest rates don’t play the same role. Returns on investments in a low interest-rate financial environment and safe-haven investing do play a role.”